By: Villalba H.B. No. 3853
A BILL TO BE ENTITLED
AN ACT
relating to creation of the university research initiative fund,
the abolishment of the Texas emerging technology fund, and the
disposition of balances from the Texas emerging technology fund.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subtitle H, Title 3, Education Code, is amended
by adding Chapter 156 to read as follows:
CHAPTER 156. UNIVERSITY RESEARCH INITIATIVE FUND
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 156.001. DEFINITIONS. In this chapter:
(1) "Coordinating board" means the Texas Higher
Education Coordinating Board.
(2) "Fund" means the university research initiative
fund established under Subchapter B.
(3) "Institution of higher education" has the meaning
assigned by Section 61.003.
SUBCHAPTER B. OPERATION OF FUND AND PROGRAM
Sec. 156.051. UNIVERSITY RESEARCH INITIATIVE FUND. (a)
The university research initiative fund is a dedicated account in
the general revenue fund.
(b) The fund consists of:
(1) amounts appropriated or otherwise allocated or
transferred by law to the fund;
(2) any financial benefits realized from
commercialization of intellectual or other property developed in
connection with a grant award as provided by an agreement entered
into under Section 156.053; and
(3) gifts, grants, and other donations received for
the fund.
(c) The fund may be used by the coordinating board only for:
(1) the purpose specified by Section 156.052; and
(2) necessary expenses incurred in the administration
of the fund and this chapter.
Sec. 156.052. RECRUITMENT OF NATIONALLY OR INTERNATIONALLY
RENOWNED RESEARCHERS; MATCHING GRANTS. (a) The coordinating board
shall provide grants from the fund to institutions of higher
education to match available funding from those institutions for
the recruitment and retention of:
(1) members of recognized national academies in the
fields of science, technology, engineering, or mathematics or other
nationally recognized researchers in those fields and any
associated assistants; or
(2) researchers who are Nobel laureates in the fields
of science or mathematics or other internationally recognized
researchers in the fields described by this subsection or the
fields of technology or engineering and any associated assistants.
(b) In awarding grants, the coordinating board shall give
priority to proposals that involve the recruiting of researchers in
fields that are reasonably likely to contribute substantially to
this state's national and global economic competitiveness.
(c) The coordinating board may appoint one or more advisory
committees to assist the board with the review and evaluation of
grant proposals under this section.
Sec. 156.053. MATCHING GRANT AGREEMENT. (a) Before
awarding a matching grant under this chapter, the coordinating
board shall enter into a written agreement with the institution of
higher education selected to receive the grant.
(b) The agreement between the coordinating board and a grant
recipient under this chapter must provide for the distribution of
royalties, revenue, or other financial benefits realized from the
commercialization of intellectual or real property developed in
connection with receipt of a grant under this chapter. To the extent
authorized by law and not in conflict with another agreement, the
agreement shall appropriately allocate by assignment, licensing,
or other means 50 percent of the royalties, revenue, or other
financial benefits to this state for deposit in the fund.
(c) An agreement under this section may include a provision
specifying that if, as of a date certain provided in the agreement,
the grant recipient has not used the money received under this
chapter for the purposes for which the grant was intended, the
grant recipient shall repay that amount and any related interest
applicable under the agreement to the coordinating board for
deposit to the fund at the agreed rate and on the agreed terms.
Sec. 156.054. AUTHORIZED EXPENSES. Money awarded from the
fund may be used by the grant recipient to pay any expense
reasonably related to the purposes described by Section 156.052(a),
including for research and research capability, salaries and
benefits, travel, consumable supplies, and equipment.
Sec. 156.055. PROHIBITED ACTIVITIES. (a) An institution
of higher education may not knowingly attempt to recruit a person
described by Section 156.052(a)(1) or (2) who is an individual
researcher of another institution of higher education.
(b) An institution of higher education that violates this
section is ineligible to receive a grant under this chapter before
the third anniversary of the date the institution last engaged in
conduct prohibited by this section.
Sec. 156.056. DOCUMENTATION OF BENEFITS TO STATE. An
institution of higher education must document specific benefits
that this state may expect to gain as a result of recruiting
researchers described by Section 156.052(a)(1) or (2) to the
institution and enhancing the research capabilities and programs of
the institution before the institution may enter into an agreement
to receive a grant under this chapter.
Sec. 156.057. ANNUAL REPORT. (a) Not later than January 31
of each year, the coordinating board shall submit to the governor,
the lieutenant governor, the speaker of the house of
representatives, and the standing committee of each house of the
legislature with primary jurisdiction over economic development
matters a report that includes the following information regarding
grants awarded under this chapter during the preceding state fiscal
year:
(1) the total number and amount of grants awarded; and
(2) the name of each grant recipient and the amount of
the grant awarded to the recipient.
(b) The coordinating board shall post and maintain on the
coordinating board's Internet website each report submitted under
this section.
SECTION 2. Subchapter G, Chapter 404, Government Code, is
amended by adding Section 404.1031 to read as follows:
Sec. 404.1031. MANAGEMENT OF INVESTMENT PORTFOLIO FROM
FORMER TEXAS EMERGING TECHNOLOGY FUND. (a) In this section,
"state's emerging technology investment portfolio" means:
(1) the equity positions in the form of stock or other
security the governor took, on behalf of the state, in companies
that received awards under the former Texas emerging technology
fund; and
(2) any other investments made by the governor, on
behalf of the state, in connection with an award made under the
former Texas emerging technology fund.
(b) The trust company shall manage the state's emerging
technology investment portfolio in a manner that a prudent
investor would employ exercising reasonable care, skill, and
caution, taking into consideration the investment of all assets of
the portfolio. The trust company may recover its reasonable and
necessary costs incurred in the management of the portfolio from
the earnings on the investments in the portfolio.
(c) Any proceeds or other earnings from the sale of stock or
other investments in the state's emerging technology investment
portfolio, less the amount permitted to be retained for payment of
its costs for managing the portfolio as provided by Subsection (b),
shall be remitted by the trust company to the comptroller for
deposit in the general revenue fund.
SECTION 3. Effective September 1, 2016, Subchapter G,
Chapter 404, Government Code, is amended by adding Section 404.1032
to read as follows:
Sec. 404.1032. VALUATION OF INVESTMENTS FROM FORMER FUND;
ANNUAL REPORT. (a) To the maximum extent practicable, the
non-profit annually shall perform a valuation of the equity
positions the governor took, on behalf of the state, in companies
that received awards under the former Texas emerging technology
fund and of other investments made by the governor, on behalf of the
state, in connection with an award under that fund. The valuation
must be based on a methodology that is consistent with generally
accepted accounting principles.
(b) Not later than January 31 of each year, the trust
company shall submit to the lieutenant governor, the speaker of the
house of representatives, and the standing committee of each house
of the legislature with primary jurisdiction over economic
development matters and post on the office of the trust company's
Internet website a report of any valuation performed under this
section during the preceding state fiscal year.
SECTION 4. Section 481.078, Government Code, is amended by
adding Subsection (m) to read as follows:
(m) The office of the governor shall adopt rules for the
operation of the trusteed program established under this section.
The rules must include:
(1) forms and procedures for applications for and
award of grants;
(2) procedures for evaluating grant applications;
(3) provisions governing the grant agreement process;
and
(4) methods and procedures for monitoring grant
recipients and projects or activities for which a grant is awarded
from the fund to determine whether and to what extent the grant
recipients comply with job creation performance targets, capital
investment commitments, or other specified performance targets in
the grant agreement.
SECTION 5. Subchapter D, Chapter 490, Government Code, is
repealed.
SECTION 6. Section 490.001(4), Government Code, is amended
to read as follows:
(4) "Award" means:
(A) for purposes of former Subchapter D, an
investment in the form of equity or a convertible note;
(B) for purposes of Subchapter E, an investment
in the form of a debt instrument;
(C) for purposes of Subchapter F, a grant; or
(D) other forms of contribution or investment as
recommended by the committee and approved by the governor,
lieutenant governor, and speaker of the house of representatives.
SECTION 7. Sections 490.005(a) and (b), Government Code,
are amended to read as follows:
(a) Not later than January 31 of each year, the governor
shall submit to the lieutenant governor, the speaker of the house of
representatives, and the standing committee of each house of the
legislature with primary jurisdiction over economic development
matters and post on the office of the governor's Internet website a
report that includes the following information regarding awards
made under the fund during each preceding state fiscal year:
(1) the total number and amount of awards made;
(2) the number and amount of awards made under
Subchapters [D,] E[,] and F;
(3) the aggregate total of private sector investment,
federal government funding, and contributions from other sources
obtained in connection with awards made under each of the
subchapters listed in Subdivision (2);
(4) the name of each award recipient and the amount of
the award made to the recipient; and
(5) a brief description of any [the] equity position
that the governor, on behalf of the state, may take in companies
receiving awards and the names of the companies in which the state
has taken an equity position.
(b) The annual report must also contain:
(1) the total number of jobs actually created by each
project receiving funding under this chapter;
(2) an analysis of the number of jobs actually created
by each project receiving funding under this chapter; and
(3) a brief description regarding[:
(A)] the methodology used to determine the
information provided under Subdivisions (1) and (2), which may be
developed in consultation with the comptroller's office[;].
[(B) the intended outcomes of projects funded
under Subchapter D during each preceding state fiscal year; and
(C) the actual outcomes of all projects funded
under Subchapter D during each preceding state fiscal year,
including any financial impact on the state resulting from a
liquidity event involving a company whose project was funded under
that subchapter.]
SECTION 8. Subchapter A, Chapter 490, Government Code, is
amended by adding Section 490.007 to read as follows:
Sec. 490.007. TRANSFER OF EQUITY INVESTMENTS AND
CONVERTIBLE NOTES.
All investments in the form of equity or convertible notes
made by the fund under the former Subchapter D and under Subchapter
E prior to September 1, 2015 are hereby transferred to the Texas
Technology Investment Portfolio, an investment portfolio, and
governed by Subchapter R, Chapter 403, Government Code.
SECTION 9. Section 490.102(a), Government Code, is amended
to read as follows:
(a) Money appropriated to the fund by the legislature, less
amounts necessary to administer the fund under Section 490.055,
shall be allocated as follows:
(1) 50 percent of the money [for incentives for
collaboration between certain entities as provided by Subchapter D;
[(2) 16.67 percent of the money for research award
matching as provided by Subchapter E to the university research
initiative fund under Subchapter B, Chapter 156, Education Code, as
added by this Act.; and
(2) 50 [(3) 33.33] percent of the money for
acquisition of research superiority as provided by Subchapter F.
SECTION 10. Section 490.303, Government Code, is amended to
read as follows:
Sec. 490.303. ELIGIBILITY OF CLEAN COAL PROJECT FOR MONEY.
Notwithstanding any other provision of this subchapter, a clean
coal project constitutes an opportunity for emerging technology
suitable for consideration for a grant under Subchapter C,
[incentives as provided by Subchapter D,] grant matching as
provided by Subchapter E, and acquisition of research superiority
under Subchapter F.
SECTION 11. Subchapter R, Chapter 403, Government Code, is
added to read as follows:
Sec. 403.501. DEFINITIONS.
In this subchapter:
(1) "Board" or "board" means the board of the
non-profit organization managing the Texas Technology Investment
Portfolio.
(2) "Institution" and "institutional fund" have the
meanings assigned by Chapter 163, Property Code.
(3) "Participated" means to have taken action as an
officer or employee through decision, approval, disapproval,
recommendation, giving advice, investigation, or similar action.
(4) "Particular matter" means a specific
investigation, application, request for a ruling or determination,
rulemaking proceeding, contract, claim, charge, accusation,
arrest, or judicial or other proceeding.
Sec. 403.502. TEXAS TECHNOLOGY INVESTMENT PORTFOLIO
MANAGEMENT; AUTHORITY.
(a) The office of the comptroller is hereby delegated
investment authority for the management of the former Subchapter D,
Section 490, Government Code investments, hereafter referred to as
the Texas Technology Investment Portfolio, to the same extent as an
institution with respect to an institutional fund under Chapter
163, Property Code.
(b) The office of the comptroller may enter into a contract
with a nonprofit corporation for the corporation to manage the
Texas Technology Investment Portfolio and appoint the members of
the board of the nonprofit corporation. The corporation may not
engage in any business other than portfolio management and
investment/re-investment of funds designated by the board under the
contract.
Sec. 403.503. PORTFOLIO MANAGEMENT; BOARD AUTHORITY,
MEMBERSHIP, REQUIREMENTS.
(a) The board of the nonprofit corporation must approve the:
(1) articles of incorporation and bylaws of the
corporation and any amendment to the articles of incorporation or
bylaws;
(2) investment policies of the corporation, including
changes to those policies;
(3) audit and ethics committee of the corporation;
(4) code of ethics of the corporation;
(5) hiring and firing of the officers of the
corporation;
(6) annual operating budget for the corporation; and
(6) approving material amendments or changes to any
existing contract with a recipient.
(b) The board of directors of the corporation shall have
five members;
(c) The appointed board of directors shall possess
background and expertise in law, finance and/or investment
portfolio management; and
(d) Each appointed member of the board of directors of the
corporation is subject to removal and replacement by and at the
pleasure of the comptroller.
(e) The corporation shall file quarterly reports with the
board concerning matters required by the board.
(h) The corporation is subject to the Texas Non-Profit
Corporation Act (Article 1396-1.01 et seq., Vernon's Texas Civil
Statutes).
Sec. 403.504. CONFIDENTIAL INFORMATION; CONFLICTS.
(a) Information collected by the corporation, the board or
the office of the comptroller concerning the identity, background,
finance, marketing plans, trade secrets, or other commercially or
academically sensitive information of an individual or entity being
considered for, receiving, or having received an award from the
fund is confidential unless the individual or entity consents to
disclosure of the information.
(b) The following information collected by the
corporation, the board or the office of the comptroller under this
chapter is public information and may be disclosed under Chapter
552:
(1) the name and address of each individual or entity
that comprises the portfolio;
(2) the balances of funds advanced and encumbered to
each portfolio company;
(3) a brief description of the project for which the
funds have been applied; and
(4) if applicable, a brief description of the equity
position taken in an entity that has received funds from the state.
(c) The corporation may not enter into an agreement or
transaction with a:
(1) director, officer, or employee of the corporation
acting in other than an official capacity on behalf of the
corporation; or
(2) business entity in which a director, officer, or
employee of the corporation has an interest
(d) An agreement or transaction entered into in violation of
Subsection (c) is void.
(e) For purposes of this section, a person has an interest
in a business entity if:
(1) the person owns five percent or more of the voting
stock or shares of the business entity;
(2) the person owns five percent or more of the fair
market value of the business entity; or
(3) money received by the person from the business
entity exceeds five percent of the person's gross income for the
preceding calendar year.
(f) A former director of the corporation may not make any
communication to or appearance before a director, officer, or
employee of the corporation before the second anniversary of the
date an individual ceased to be a director of the corporation if the
communication or appearance is made:
(1) with the intent to influence; and
(2) on behalf of any person in connection with any
matter on which the person seeks action by the corporation.
(g) A former officer or employee of the corporation may not
represent any person or receive compensation for services rendered
on behalf of any person regarding a particular matter in which the
former officer or employee participated during the period of
service or employment with the corporation, either through
personal involvement or because the particular matter was within
the officer's or employee's responsibility.
(h) An individual who violates Subsection (f) or (g)
commits an offense. An offense under this subsection is a Class A
misdemeanor.
SECTION 12. (a) The repeal by this Act of Subchapter D,
Chapter 490, Government Code, relating to certain
commercialization of emerging technology activities funded by the
Texas emerging technology fund, does not affect the validity of an
agreement between the governor and the recipient of an award
awarded under Subchapter D, Chapter 490, or a person to be awarded
money under that subchapter that is entered into under Chapter 490
before September 1, 2015.
(b) Money from the Texas emerging technology fund that is
encumbered because the money is awarded under Subchapter D, Chapter
490, Government Code, or otherwise obligated by agreement before
September 1, 2015, but under the terms of the award or agreement
will not be distributed until a later date is now subject to
Subchapter R, Section 403, Government Code and shall be distributed
in accordance with the terms of the award or agreement.
SECTION 13. (a) Notwithstanding Section 490.005(a),
Government Code, as amended by this Act, the report due under that
section by January 31, 2016, must also include the specified
information required by Subdivisions (1)-(5) of that section
regarding awards made under Subchapter D, Chapter 490, Government
Code, during the 2015 state fiscal year and each preceding state
fiscal year.
(b) Notwithstanding Sections 490.005(a) and (b), Government
Code, as amended by this Act, the report due under Section
490.005(a) by January 31, 2016, must also contain the specified
information required by Section 490.005(b) regarding projects
receiving funding under Subchapter D, Chapter 490, Government Code,
during the 2015 state fiscal year and each preceding state fiscal
year.
SECTION 14. A regional center of innovation and
commercialization established under Section 490.152, Government
Code, is abolished on the effective date of this Act. Each center
shall transfer to the office of the governor a copy of any meeting
minutes required to be retained under Section 490.1521, Government
Code, as that section existed immediately before that section's
repeal by this Act, and the office shall retain the minutes for the
period prescribed by that section.
SECTION 15. If a conflict exists between this Act and
another Act of the 84th Legislature, Regular Session, 2015, that
relates to the Texas emerging technology fund, this Act controls
without regard to the relative dates of enactment.
SECTION 16. Except as otherwise provided by this Act, this
Act takes effect September 1, 2015.